SA Political Economy Dilemmas - October 2013

SOUTH AFRICA - In Brief 08 Oct 2013 by Iraj Abedian

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The IMF Article IV puts the “cat amongst the pigeons” in South Africa’s highly charged political economy environment.  Over the past year or so, South Africa’s labour unions have raised the political and ideological temperature substantially. A blend of binding factors has been at play. Declining GDP growth has led to the unions’ loss of membership- well over 600,000 jobs have been lost since 2008/09. Union leadership’s lack of focus on the workers’ conditions has led to widespread splintering within trade unions themselves. The emergence of splinter unions, in turn, has created a competitive race for ever- rising wage demand, at times exceeding 100%! Meanwhile, the ruling party ANC Alliance (inclusive of Confederation of SA Trade Unions- COSATU) has run into real dilemmas, possibly for the first time since 1994. With its acknowledged commitment to back COSATU in exchange for electoral support, the party has lost sight of the consequences for investment, jobs, GDP growth and tax revenues. COSATU’s fractured leadership and institutional structure, meanwhile, is no longer the effective electoral machinery that it used to be. Alternative unions have emerged with a lot more coherence, albeit radical, and with rising membership- something that the ANC cannot simply ignore. Recent and sustained disruptions caused by industrial relations in the mining and manufacturing sectors have begun to dent the country’s brand as a reliable and favourable investment jurisdiction. Ill-considered policy pronouncements by the Minister of Mineral Resources together with equally troubling statements by the secretary general of NUMSA (the manufacturing sector labour union) have ruffled the fea...